Friday, January 23, 2015

Baby boomer homebuyers are boosting builders’ business

I’m having a hard time getting my head about being a target market.

Except for hair dye and cholesterol blockers, folks my age don’t get a lot of attention from Madison Avenue.
The last time mass marketers considered me their prime demographic, it was for sales of eight-track tapes.
So I’m surprised by the love I’m getting from the nation’s $400 billion residential construction industry.
Turns out that over-55 Americans are the one of the largest and fastest-growing segments of the new home market.
“We thought that as soon as the housing industry started to recover this segment would take off in a very strong way,” Sharon Dworkin Bell, senior vice president of the National Association of Home Builders, said at the industry’s annual meeting in Las Vegas. “We have definitely seen that increase in the last year.
“We expect these buyers to continue to be a big share of the home market.”
For 2015, Americans 55 and older are likely to account for 44 percent of households. And by 2020 that share will rise to about 47 percent, housing economists forecast.
“It’s growing not just in absolute numbers but as share of all U.S. households,” said Paul Emrath, a research vice president with the Washington, D.C.-based builders association. “Those people have wealth, and that wealth makes this segment of the market attractive to many builders.”
Chris Porter, chief demographer with John Burns Real Estate Consulting, said that there are about 89 million Americans over age 55. They represent more than half of current homeowners.
“It’s a very, very rapidly growing group,” Porter said. “It’s ramped up in the last decade as baby boomers have reached this age.
“One of the reasons it continues to grow is they aren’t dying off as rapidly,” he said. “We are living longer and longer, and people are also working longer.”
Porter said that new home purchases by older buyers were delayed during the recession.
“Now they are ready to buy,” he said. “They have been waiting for the equity to return in their current homes.
“The challenge is they can’t find what they are looking for,” Porter said. “They want different layouts and new features and changes in location.”
And with existing housing inventories running short in many parts of the country, boomer buyers are more likely to be hunting for a newly built home.
“This is the story of the baby boomer,” said Tim McCarthy, a Pennsylvania homebuilder who’s vice chairman of the builders association’s 55-plus housing council. “They started arriving in our office about three years ago. Now it’s a tidal wave.”
McCarthy said that when one of his boomer target communities recently opened its doors, he sold 68 new houses in the first hour.
“The demand right now is overwhelming,” he said. “The challenge is to keep up with the production of homes.”
Steve Brown - Dallas Morning News